July 31, 2011 by David K. Sutton
Tell Me Again How Jobs Are Created
Trickle down economics is an idea that’s been around for many decades. It’s also an idea that has been thoroughly proven wrong for nearly as long. Yet many still subscribe to it. The idea that giving a tax break to the wealthy will allow more jobs to be created is one of those ideas that, on the surface, seems like it has some validity. But the idea quickly breaks down when you actually apply some critical thinking. Jobs are not created by giving more money to those that already have more money than they need. Job creation is ALWAYS an issue of demand. To repeat, job creation is a demand problem, not a taxation problem. If you give more money to a “job creator…another way of saying, wealthy people that don’t need it” with no increased demand for their products there is NO reason for any additional jobs to be created. On the other hand, if instead the government targets the lower and middle classes with stimulus and/or tax breaks, that will put more spending power behind the biggest segment of the population instead of a select few. The increased spending power of the middle and lower classes in turn creates additional demand for products and services. Since our economy is largely an economy of consumption, this additional demand for products and services is what creates jobs.